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DIRECTIVE No. 15/2003/CT-TTg OF JUNE 12, 2003 ON THE ELABORATION OF THE 2004 SOCIO-ECONOMIC DEVELOPMENT PLAN AND STATE BUDGET ESTIMATES

In furtherance of the National Assembly's Resolution No. 09/2002/QHXI on the State budget estimates and Resolution No. 14/2002/QHXI on the 2003 tasks, the Government has adopted many mechanisms and policies and concentrated its efforts on directing the ministries, central agencies and localities to bring into full play all resources, to promptly settle and remove problems and difficulties, to step up agricultural and industrial production, develop service activities, boost exports and apply measures to reduce costs in order to raise the competitiveness of each product as well as the entire economy; to speed up the execution tempo of investment projects on social and cultural development; to initially restore order in some fields like traffic and social order and safety; to timely and effectively handle newly-arising issues regarding severe acute respiratory syndrome (SARS) and to maintain security and national defense.

Though in the first months of 2003, we had to confront numerous difficulties, the socio-economic development has still been maintained at a fairly high rate; in the first quarter, GDP rose by 6.9% while the positive trend of development is forecasted for the second quarter.

However, the world and domestic situation in the coming period are charactered by advantages which can be exploited and promoted as well as great difficulties and challenges, especially newly-arising difficulties due to the unpredictable impacts of the Iraqi war and SARS, and to complicated climatic developments in the rainy and flood season'.

The Prime Minister requests the ministries, central agencies, provinces and centrally-run cities to promote their spirits of creativeness and dynamism, surmounting difficulties and challenges and well implementing the 2003 socio-economic development solutions mapped out in the Government's Resolution No. 02/2003/NQ-CP of January 17, 2003 on some major undertakings and solutions for the performance of the 2003 socio-economic development tasks, which require concentrated direction, and resolutions of the Government's regular meetings in 2003; to strive to successfully realize the National Assembly's Resolutions on the 2003 State budget tasks and estimates, and at the same time elaborate the 2004 socio-economic development plan and State budget estimates with the following principal requirements and contents:

I. PRINCIPAL CONTENTS AND TASKS OF THE 2004 PLAN

1. Major objectives and tasks of the 2004 plan:

2004 is the year of extremely important significance for the achievement of the targets of the five-year plan. The Prime Minister requests the ministries, central agencies and localities to concentrate their efforts on well implementing the following major objectives and tasks:

a/ To strive to achieve an economic growth rate (GDP) of 7.5% or higher, of which industry and construction shall rise by 10-10.5%; services, by 7.2-7.5%; and agriculture, forestry and fishery, by 3.9 - 4.2%. To create necessary conditions for the economy to develop in a stable and sustainable manner at higher rates in 2005.

b/ To expeditiously review the approved plannings, especially plannings on product development. To continue restructuring production, using the strengths of each region and linking production with consumption market. To develop products with high competitive edges, restrict products of low competitiveness or requiring high protection. To continue implementing the programs on reducing production costs, gradually decreasing then eliminating unreasonable costs, contributing to raising the competitiveness of products.

c/ To adopt appropriate policies aiming to raise the domestic accumulation rate and mobilize more than 35% of GDP for development investment; to strive to achieve the total State budget revenues of 20-21% of GDP; to well implement the amended State Budget Law; to increase expenditures for education and training, healthcare, science and technology, and materialize social policies as well as policies on hunger elimination and poverty alleviation.

To reduce bad debts and overdue debts and raise the quality of the banking system's services.

d/ To raise the efficiency of external economic activities, boost export and seek new markets. To create favorable conditions so as to attract foreign direct investment capital; to quickly disburse and efficiently use official development assistance (ODA) capital. To continue well implementing the roadmap for AFTA accession as well as multilateral and bilateral commitments for regional and international economic integration.

e/ To continue the renovation and create substantial and comprehensive changes in the development of science and technology; education and training; to develop the vocational training system; and to raise the quality of human resources with rational structure. To accelerate the application of advanced technologies to production and business activities; and to enhance the protection of natural resources and environment.

f/ To effectively settle burning social issues; to speed up the tempo of realizing the objectives set in the program on hunger elimination, poverty alleviation and employment and the Program 135. To further concentrate investment in socio-economic development in six difficulty-hit northern mountainous provinces, the Central Highlands and Mekong River delta.

g/ To speed up the administrative reform, perfecting administrative institution, consolidating the organization and apparatus, building and raising the capability of the contingent of officials and public-servants and implementing public financial reform. To raise the efficacy and transparency of State policies.

h/ To continue consolidating national defense and security, combining them with socio-economic development; to continue fighting organized crimes and maintaining social order and disciplines.

2. Tasks of elaborating the 2004 State budget estimates:

2004 is the first year of implementing the State Budget Law (amended) passed by the XIth National Assembly on December 16, 2002 at its second session, and at the same time, is the year of implementing the Law amending and supplementing a number of articles of the Value Added Tax Law; the Law amending and supplementing a number of articles of the Law on Special Consumption Tax; and the Law on Enterprise Income Tax (amended). Therefore, levels and branches are requested to thoroughly grasp and organize the implementation of the State Budget Law and the above-mentioned tax laws in strict accordance with the provisions thereof.

Basic objectives of the 2004 State budget estimates are: To implement a reasonable mobilization policy, ensuring sources for the performance of socio-economic development tasks and national defense and security; to promote the internal strengths of branches and localities, concentrating capital and funding for the implementation of the country's important tasks; to distribute and use funding for the right purposes, in a thrifty and efficient manner, preventing wastefulness and losses and making healthy the State budget so as to contribute to boosting the fast and sustainable economic growth and firmly maintaining political stability as well as the social order and safety.

The tasks of elaborating the 2004 State budget estimates include:

a/ To estimate the State budget revenues on the basis of accurately and fully calculating the revenues prescribed by law, analyzing and forecasting factors on economic growth, market, prices,...; to implement all provisions on production and business promotion, stepping up of export and expansion of markets; to fulfill the commitments of regional and international economic integration process; to take measures to intensify the management of value added tax collection and reimbursement, prevent under-collection, smuggling and trade frauds.

To estimate the State budget revenues with the desirable mobilization level of 20-21% of GDP, of which the tax and charge collections shall represent 18-19% of GDP. To strive to increase the revenues of the ministries, central branches and localities (excluding the revenues from crude oil) by over 10% on average as compared with the 2003's level.

b/ The estimate of the State budget expenditures should focus on the performance of the following major tasks:

- To estimate the State budget expenditures on development investment, ensuring adequate capital for national key projects, with priority given to projects under Program 135 and program on school solidification, projects on sedentarization and relocation of people living in the reservoir beds covered by large hydroelectric power projects, and project on planting 5 million hectares of forests. To continue allocating investment capital for the implementation of policies on socio-economic development in northern mountainous provinces meeting with great difficulties, the Central Highlands and Mekong River delta; to ensure enough capital for investment preparation; to allocate adequate reciprocal capital for ODA-funded projects; to continue allocating capital for the development of rural traffic, and infrastructures for aquaculture, craft villages and tourism; to provide support for the production of important products, export activities and restructuring of agricultural economy; to support trade promotion activities, expand and seek markets and supply market information,...

- To estimate expenditures on the development of science and technology, education and training, culture, health and social affairs, ensuring funding for the realization of regimes and policies for each field, each branch or each area. To estimate administrative and non-business expenditures at reasonable levels so as to spur non-business units with revenues to fully and effectively implement the financial management regime under the Government's Decree No. 10/2002/ND-CP of January 16, 2002. The State administrative agencies shall take initiative in making registration for the implementation of the mechanism of assignment of package payroll and funding according to the Prime Minister's Decision No. 192/2001/QD-TTg of December 17, 2001.

- To estimate the expenditures for the implementation of national target programs ensuring their tempo and objectives prescribed in the Prime Minister's Decision No. 42/2002/QD-TTg of March 19, 2002.

- To continue with the wage reform aiming to create a motive force for accelerating socio-economic development and administrative reform. The ministries, central agencies, localities and units using budget funding must thoroughly grasp the reform objectives, considering this their important tasks; take measures to create sources for wage reform in each agency, unit or budgetary level from the sources of revenue permitted to be left according to prescribed regimes (at least 40%, particularly for the health service, at least 35%), from the source of revenue increase (at least 50%), savings from regular expenditures, excluding wages and other amounts of wage nature (at least 10%).

- To set aside reserve amounts according to the provisions of the State Budget Law in order to take initiative in coping with natural disasters and floods and dealing with other urgent tasks.

c/ The State budget balance shall be effected on the principle that the total revenues from taxes, charges and fees must be higher than the total regular expenditures, being able to repay due debts and make accumulation for development investment.

The State budget deficit shall be kept at the rate of 5% or under against the GDP, suitable to the capability of domestic borrowings as well as foreign preferential loans to make up therefor, not to borrow foreign commercial loans to offset the deficit.

d/ On the local budget estimates:

As 2004 is the first year of the budget-stability period as prescribed in the State Budget Law (amended), the localities should closely adhere to the 2004 State budget objectives and tasks mentioned above, fully comply with the provisions of the State Budget Law and the documents guiding the implementation thereof in order to elaborate the 2004 budget estimates. All revenue sources and spending tasks of the localities must be balanced within their local budgets, in which attention should be paid to the following issues:

- The estimation of the State budget revenues in localities must be based on the 2004 economic growth forecast and revenue sources of each branch, field and economic establishments of each locality as well as newly-arising revenue sources in the localities in order to accurately and fully calculate the revenues of each field or each collection item according to regime; the revenue estimate of each province or centrally-run city must cover all revenue sources of communes, wards and townships as prescribed in the State Budget Law.

- The estimation of the local budget expenditures must be based on the 2004 socio-economic development tasks of the localities, the current expenditure regimes, policies and norms and 2004 budget allocation norms under the Prime Minister's decision; estimating reasonable and specific spending demands for each spending field of the local budget; setting aside reserve amounts according to the provisions of the State Budget Law; the 2004 local budget expenditures according to each field must cover the spending tasks of commune, ward and township budgets.

- Taking initiative in calculating sources for the wage reform as prescribed at Point b above.

- Taking initiative in using the allocated budget for the full repayment of due debts borrowed or mobilized to ensure the healthiness of local budgets in strict accordance with prescribed regimes.

- Estimating expenditures for the implementation of national target programs, Program 135 and project on planting 5 million hectares of forests (the work volume performed by localities) on the basis of the prescribed specific objectives and tasks of each target program and implementation tempo of the localities.

3. The tasks of formulating development investment plans:

The 2004 development investment should ensure the following objectives:

The investment must serve and create conditions for the process of economic restructuring along the direction of raising efficiency and promoting the advantages of each region, each branch or each product; quickly raise the competitiveness of the economy.

To continue making investment in communications and post infrastructures, irrigation systems, rural infrastructures, tourist infrastructures, ecological environment protection, natural disaster prevention, combat and reduction,...; to concentrate investment in the development of education, training, science, technology, health and society.

To make investment in the construction of essential infrastructures for poor communes (outside the Program 135) covered by the national target program on hunger elimination, poverty alleviation and employment; to provide investment support for difficulty-hit regions; and to implement national target programs…

To the above-mentioned ends, the ministries, branches, localities and Corporations 91 should apply measures to mobilize sources of development investment capital in the entire society for the development of each branch, each field and each locality.

On the basis of the above-stated major objectives, the development investment plans of the ministries, branches, localities and Corporations 91 must ensure the following requirements:

The 2004 development investment plans of the ministries, central agencies, localities and Corporations 91 should cover all capital sources: State budget capital, State credit capital, investment capital of State enterprises, investment capital mobilized from the population and private sector, foreign direct investment capital and other mobilization sources.

The budget capital source shall be used, first of all, for apportioning capital for national important works, transitional projects and projects which can be completed in 2004; allocating adequate reciprocal capital to ODA-funded projects in order to quickly disburse ODA capital sources; national target programs and Program 135. To allocate adequate capital for the work of planning and investment preparation.

For development investment plans of provinces and centrally-run cities:

The development investment plans of provinces and centrally-run cities should cover all capital sources in the entire society; mobilize to the utmost all sources for development investment, ensuring that the growth rate of investment capital in 2004 is higher than the 2003 plan.

While apportioning development investment capital from the sources of local budgets, localities should spare a proper percentage for development investment on the principle that the development investment expenditure growth rate is higher than the regular expenditure growth rate and the local budget revenue growth rate.

Regarding capital sources for re-investment in the localities, there must be right at the beginning of the year plans on the use thereof in strict accordance with the objectives and beneficiaries such as: (1) The revenue source from tax on use of agricultural land shall be used only for investment in agricultural infrastructure projects, mainly irrigation works; (2) The source of capital from the granting of land-use right and land rents shall be used for investment in infrastructural works, including traffic, electricity supply, water supply, post… (3) The source of capital from the sale of State-owned houses shall be used for investment in the development of dwelling houses and dwelling-house fund; (4) The proceeds from construction lottery activities shall be used for concentrated investment in works and projects in the two fields of education and healthcare; (5) The source of natural resource tax shall be used for investment in infrastructures falling within the scope of influence of the natural resources being exploited.

The source of investment capital from the central budget shall be used only to provide support for provinces or cities with low annual State budget revenues, which are incapable of making regulation for the central budget. Projects entitled to support from the central budget to local budgets include:

- A part of the revenues from the collection of export tax and import tax at border-gates shall be left to such border-gates for investment in the construction of infrastructures in the border-gate economic zones: communications, water supply and drainage, system of commercial warehouses, control, inspection and quarantine stations, trade promotion centers, and health stations;

- The source of investment capital earned from television advertisements shall be used for investment in projects in the television system, including the television coverage of deep-lying areas and difficulty-hit areas;

- The source of direct support capital from the central budget for local budgets shall be used for investment in national target programs, Program 135 and other target programs under the Prime Minister's decisions (providing investment support for the infrastructures for tourism, craft villages and aquaculture, program on flood retardation and division, and traffic roads in service of the work of frontier management); and other infrastructural works.

III. PLAN ELABORATION TEMPO AND ASSIGNMENT OF RESPONSIBILITIES FOR IMPLEMENTATION

1. On plan elaboration tempo:

In early June 2003, the Ministry of Planning and Investment and the Ministry of Finance shall provide guidance on the 2004 plan framework and State budget estimates to the ministries, central agencies, localities and Corporations 91 for use as basis for the elaboration of their plans.

In June and July 2003, the ministries, central agencies, localities and Corporations 91 shall elaborate their 2004 socio-economic development plans and State budget estimates and report them to the Ministry of Planning and Investment and the Ministry of Finance for sum-up and submission thereof to the Government before July 25, 2003.

(Particularly, the ministries and central agencies should send their plans before July 20, 2003).

In August 2003, the Ministry of Planning and Investment and the Ministry of Finance shall sum up the 2004 socio-economic development plans and State budget estimates, and at the same time, draft plans on allocation of plan and budget norms.

In September 2003, the Ministry of Planning and Investment and the Ministry of Finance shall report on the 2004 socio-economic development plans and State budget estimates to the Government.

Before November 20, 2003, the Prime Minister shall assign the 2004 socio-economic development plans and State budget estimates to the ministries, central agencies, localities and Corporations 91 on the basis of the National Assembly's Resolutions on the 2004 State budget estimates and tasks.

Before November 25, 2003, the Ministry of Planning and Investment and the Ministry of Finance shall provide detailed guidance thereon to the ministries, central agencies, localities and Corporation 91.

Before December 10, 2003, the ministries, central agencies and localities shall complete the allocation of plans and budget estimates to their subordinates on the basis of tasks assigned by the Prime Minister and the guidance of the Ministry of Planning and Investment and the Ministry of Finance.

2. On assignment of responsibilities for implementation:

a/ The Ministry of Planning and Investment:

To assume the prime responsibility and coordinate with the Finance Ministry in calculating and working out plans and major balances for use as basis for guiding the ministries, central agencies and localities to elaborate their 2004 plans.

To organize and guide the elaboration and summing up of the 2004 socio-economic development plan.

To assume the prime responsibility and coordinate with the Finance Ministry in drafting the development investment plan and elaborating plan on allocation of development investment expenditures according to assigned fields and send them to the Finance Ministry before September 15, 2003; to sum up plans on allocation of expenditure estimates for national target programs (the expenditures on capital construction investment).

To work with the ministries, central agencies and localities on the 2004 socio-economic development plan.

b/ The Finance Ministry:

To guide the ministries, central agencies and localities in evaluating the situation on implementation of the 2003 State budget estimates; to make the general estimates and notify the ministries, central agencies and localities of the examination figures on the 2004 State budget revenue and expenditure estimates.

To assume the prime responsibility and coordinate with the Ministry of Planning and Investment and the concerned agencies in summing up and elaborating the 2004 State budget estimates and the plans on allocation of the 2004 central budget; to work with the ministries, central agencies and localities on the budget estimates.

c/ The ministries, State agencies and Corporations 91:

To coordinate with the Ministry of Planning and Investment and the Ministry of Finance in elaborating the socio-economic development tasks and budget estimates in the fields under their respective management.

The ministries and agencies which manage national target programs and the project on planting 5 million hectares of forests shall coordinate with the Ministry of Planning and Investment and the Ministry of Finance in working with the concerned ministries, central agencies and/or localities on the 2004 tasks and expenditure estimates for the said programs and project in the fields under their respective management and send them to the Ministry of Finance and the Ministry of Planning and Investment before August 15, 2003.

The ministries and State agencies shall, according to their functions and on the basis of calculation of exploitable sources, set socio-economic criteria, propose solutions, new mechanism, polices and regimes or amendments and/or supplements to the current regimes and policies for use as basis for plan elaboration and budget drafting, and notify the Ministry of Planning and Investment, the Ministry of Finance, the concerned ministries and agencies thereof before the budget-drafting time.

d/ The People's Committees of the provinces and centrally-run cities

To guide, organize and direct the provincial/municipal Planning and Investment Services, the Finance-Pricing Services to closely coordinate with other services, departments and branches in elaborating and submitting socio-economic development plans and State budget estimates to competent authorities for decision.

The Prime Minister requests the ministers, the heads of the ministerial-level agencies, the heads of agencies attached to the Government, the presidents of the provincial/municipal People's Committees, and the chairmen of the Management Boards of Corporations 91 to organize the implementation of this Directive.

Prime Minister
PHAN VAN KHAI